Ever wonder what all those letters after a financial professional's name stand for? Those letters indicate that person possesses a designation. With university degrees slowly becoming the industry standard, many people are obtaining designations to further differentiate themselves from the pack. Here are some of the financial designations making waves in the financial world. (For more, check out Financial Designations That Employers Require.)
TUTORIAL: Financial Careers
Certified Financial Planner
One of the most common designations is the CFP, which stands for Certified Financial Planner. This designation is given to professionals who counsel people about their financial needs and help manage their investments. CFPs provide advice on tax laws, insurance issues, and retirement and education expenses. CFPs must have a bachelor's degree at minimum. Advisors who want to obtain the CFP designation can do so through the Certified Financial Planner Board of Standards. This certification requires three years or 6,000 hours experience in the field, completion of a bachelor's degree and passing an examination. Candidates must also adhere to a code of ethics. The CFP exam covers the financial planning process, insurance and risk management, employee benefits planning, taxes and retirement planning, and investment and estate planning. According to the Bureau of Labor Statistics, employment for personal financial advisors is projected to grow by 30% over the 2008–2018 period.
This fast rate of growth is partly attributed to the millions of workers expected to retire in the next 10 years. Advisors will be needed to help with retirement savings, investments, taxes, and retirement and pension plans. The median annual wage of a personal financial advisor was $69,050 in May 2008 according to the Bureau, with the middle 50% earning between $46,390 and $119,290. Some financial advisors also earn bonuses and commissions in addition to wages. (To learn more, read Want A Hot Job? Follow The Money.)
Chartered Financial Analyst
Chartered Financial Analysts (CFA) is not as common as the CFP designation, but it's also well respected. CFAs are referred to as financial analysts, security analysts and retirement analysts. These professionals assess the performance of stocks, bonds, commodities and various other types of investments. They study company financial statements in order to analyze commodity prices, costs and tax rates in order to better determine a company's future earnings. A bachelor's or graduate degree is required in a related field, including accounting, business, finance, economics and statistics. This designation is sponsored by the CFA Institute. Candidates are required to have a bachelor's degree or equivalent, four years of related work experience and must pass three exams that require several hundred hours of self-study. Topics in the exam include securities analysis, financial markets and instruments, corporate finance, asset valuation and portfolio management. Employment for individuals holding this designation is expected to grow faster than average according to the Bureau of Labor Statistics.
Overall employment is expected to increase by 20% during the 2008–2018 decade. Salaries for financial analysts was $73,150 in May 2008 with the highest 10% earning more than $141,070.
A person who is interested more in the tax field can opt to become an Enrolled Agent (EA). These individuals are tax professionals authorized to represent taxpayers before the IRS. To become an EA, candidates can either take the written Special Enrollment Examination (SEE) in order to demonstrate knowledge of tax issues and obtain passing scores or have years of experience in the field. The exam is administered by the Internal Revenue Service (IRS). Employment in this field is expected to grow 13% during the 2008-2018 decade. Wages for these professionals averaged $48,100 in May 2008.
The Bottom Line
One of the most popular financial designations that is expected to grow the most is the CFP designation. However, the key to understanding which designation is right for you is to thoroughly assess and determine which skills you currently have. Also, figure out what it is that you enjoy doing and what you type of job environment you thrive in. These are key components to a successful and fulfilling career, no matter which designation you decide to choose. (More on financial designations at A Guide To Financial Designations.)